Oct 24 (Reuters) - Railcar maker Trinity Industries Inc said on Friday that it would stop shipping a highway guardrail system, after the U.S. government demanded earlier in the week that the company conduct more crash tests of the product.

The system was banned by Nevada in January, Massachusetts and Missouri banned it in September, and Virginia this month threatened to stop buying it over concerns that it can impale drivers in the event of a crash.

The guardrail system consists of a flat piece of metal at the front of the guardrail which is intended to protect vehicle occupants in crashes.

On Monday, a federal jury in Marshall, Texas, found the company liable for failing to tell a highway agency about changes it made to the ET-Plus guardrail system.

The jurors penalized the company $175 million, which under the federal False Claims Act would be tripled to $525 million.

Following this, the Federal Highway Administration (FHWA) ruled on Tuesday that new tests of the ET-Plus product for the ends of guardrails would be needed to help the regulator evaluate how well the system works.

Trinity said in a statement today that it will continue working with FHWA and will stop shipment of the product until the requested testing is completed.

Trinity did not respond to Reuters request to comment on the outstanding ET-Plus systems it has in shipment.

Trinity is expected to submit a crash-testing plan to FHWA by Oct. 31.

(Reporting by Ankit Ajmera in Bangalore; Editing by Alden Bentley)